EDELSTEN v DFC of T & ANOR

The issue raised by these two applications which were heard together concerns the correctness of a decision made by a delegate of the Commissioner of Taxation under s 14T of the Taxation Administration Act 1953. The decision was not to revoke a departure prohibition order affecting the applicant and was made by Mr J.A. Seberry, a delegate, on 13 September 1991.

Section 14S of the Taxation Administration Act empowers the Commissioner to make an order prohibiting the departure of a person from Australia for a foreign country. Such an order is commonly referred to as a departure prohibition order. The order is enforced by reason of the provisions of s 14R which provides that a person in respect of whom a departure prohibition order is in force and who knows that such an order is in force shall not depart from Australia for a foreign country unless the departure is authorized by a departure authorization certificate. Failure to comply with that requirement constitutes a criminal offence for which a penalty of $5000 or imprisonment for 12 months or both may be imposed. Section 14U empowers the Commissioner, in the circumstances therein prescribed, to issue a departure authorization certificate to enable a person against whom a departure prohibition order is in force, to leave Australia without being in breach of the order. A departure prohibition order operates for an indeterminate or unspecified period, but s 14T, in some circumstances requires, and in others, empowers, the Commissioner to revoke a departure prohibition order. Section 14Y provides that a decision made by the Commissioner under s 14T or s 14U may be reviewed by the Administrative Appeals Tribunal. Section 14V provides for an appeal to the Federal Court of Australia or the Supreme Court of a State against the making of a departure prohibition order under s 14S.

In the present proceedings, in matter No VG 366 of 1991, the applicant is seeking an order of review under the Administrative Decisions (Judicial Review) Act 1975 of the decision not to revoke a departure prohibition order. In matter No VG 403 of 1991, the applicant is seeking an order of mandamus directing the Commissioner to perform the duty or to exercise the powers conferred by s 14T to revoke the departure prohibition order.

The facts relevant to these proceedings are not in doubt. A departure prohibition order against the applicant was made on 16 December 1986. A sequestration order under the Bankruptcy Act 1966 was made against the estate of the applicant on 10 March 1988. As a result of that sequestration order, the applicant was required to deliver up his passport to his trustee in bankruptcy. By force of s 149 of the Bankruptcy Act, the applicant was discharged from bankruptcy as from 11 March 1991. As a result, he was entitled to the return of his passport but his trustee refused to return it to him. On 24 September 1991 the Federal Court directed the trustee in bankruptcy to return the passport to the applicant. The trustee in bankruptcy complied with that direction. On 5 August 1991 the applicant requested the Commissioner, pursuant to s 14T of the Taxation Administration Act, to revoke the departure prohibition order. By notice dated 13 September 1991, the Commissioner, by his delegate John Alexander Seberry, made a decision by which he refused ``to revoke the Departure Prohibition Order bearing the date of Sixteenth day of December 1986 prohibiting the

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departure of Geoffrey Walter Edelsten from Australia for a foreign country''. Reasons for the refusal to revoke the departure prohibition order were supplied to the applicant at a later date.

On 18 September 1991 the trustee in bankruptcy of the applicant commenced proceedings in the Federal Court challenging the validity of the discharge of bankruptcy of the applicant. At the time of the hearing of the proceedings in matters No VG 366 of 1991 and VG 403 of 1991 the hearing of the application by the trustee in bankruptcy had been completed but judgment had been reserved. On 6 March 1992 the Federal Court dismissed that application. Thus, there is no doubt that since 11 March 1991, the applicant has been discharged from his bankruptcy and is entitled to his passport.

It is necessary now to refer to the relevant provisions of the Taxation Administration Act. Sub-sections 14S(1) and (2) are set out in full:

``14S(1) Where-

(a) a person is subject to a tax liability; and

(b) the Commissioner believes on reasonable grounds that it is desirable to do so for the purpose of ensuring that the person does not depart from Australia for a foreign country without-

(i) wholly discharging the tax liability; or

(ii) making arrangements satisfactory to the Commissioner for the tax liability to be wholly discharged,

the Commissioner may, by order in accordance with the prescribed form, prohibit the departure of the person from Australia for a foreign country.

14S(2) Subject to subsection (3), a departure prohibition order remains in force unless and until revoked under section 14T or set aside by a court.''

The words ``tax liability'', when used in the Taxation Administration Act, are defined by s 2 to mean ``a liability to the Commonwealth arising under, or by virtue of, a taxation law''. A taxation law is defined in the same section to mean what is, essentially a tax Act or Regulation.

Section 14T is set out in full:

``14T(1) Where a departure prohibition order is in force in respect of a person and-

(a) the tax liabilities to which the person is subject have been wholly discharged and the Commissioner is satisfied that it is likely that the tax liabilities to which the person may become subject in respect of, or arising out of, matters that have occurred will be-

(i) wholly discharged; or

(ii) completely irrecoverable; or

(b) the Commissioner is satisfied that the tax liabilities to which the person is subject are completely irrecoverable,

the Commissioner shall, on application being made to the Commissioner by the person to do so or on the Commissioner's own motion, revoke the departure prohibition order.

14T(2) Where a departure prohibition order is in force in respect of a person, the Commissioner may, in the Commissioner's discretion and on application being made to the Commissioner to do so or on the Commissioner's own motion, revoke or vary the departure prohibition order.

14T(3) A reference in paragraph (1)(a) to tax liabilities having been wholly discharged includes a reference to arrangements satisfactory to the Commissioner having been made for those tax liabilities to be wholly discharged and a reference in that paragraph to the Commissioner being satisfied that it is likely that tax liabilities to which a person may become subject will be wholly discharged includes a reference to the Commissioner being satisfied that it is likely that arrangements satisfactory to the Commissioner will be made for those tax liabilities to be wholly discharged.

14T(4) As soon as practicable after a departure prohibition order made in respect of a person is revoked or varied under this section, the Commissioner shall-

(a) cause to be served, as prescribed, on the person; and

(b) cause to be given to each person to whom a copy of the departure prohibition order was given,

notification of the revocation or variation of the departure prohibition order.

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14T(5) As soon as practicable after a decision is made under subsection (1) or (2) refusing to revoke a departure prohibition order made in respect of a person, the Commissioner shall cause to be served, as prescribed, on the person notification of the decision.''

The departure prohibition order made on 16 December 1986 was as follows:

``DEPARTURE PROHIBITION ORDER

Pursuant to sub-section 14S(1) of the Taxation Administration Act 1953, I, IAN BRUCE CARMODY, delegate of the Commissioner of Taxation, believing on reasonable grounds that it is desirable to do so for the purposes of ensuring that GEOFFREY WALTER EDELSTEN, a person subject to the tax liability referred to in Schedule, does not depart from Australia for a foreign country without-

(a) wholly discharging the tax liability; or

(b) making arrangements satisfactory to me for the tax liability to be wholly discharged,

hereby prohibit the departure of GEOFFREY WALTER EDELSTEN from Australia for a foreign country.''

The schedule set out the details of the tax liability alleged which arose from the income tax years of 1977 to 1985 inclusive, the total liability alleged amounting to $1,530,679.79. The departure prohibition order was not challenged although the amount of the tax liability was. It is not necessary to refer to the challenges relating to the quantum of the liability.

The essence of the applicant's case is that upon his discharge from bankruptcy on 11 March 1991, his tax liability upon which the departure prohibition order was based, ceased. This was made clear in the letter from his solicitors to the Commissioner dated 5 August 1991. The operative parts of that letter, which constitute the applicant's request for the revocation of the departure prohibition order, are set out:

``We advise that we act on behalf of Dr Edelsten in respect of his bankruptcy matters.

We enclose copy Certificate of the Discharge from Bankruptcy pursuant to Section 149 of the Bankruptcy Act 1966 which confirms that our client was discharged from bankruptcy on 11 March 1991.

Accordingly, we request pursuant to Section 14T of the Taxation Administration Act 1953 that you revoke the Departure Prohibition Order on our client. As our client is now discharged from bankruptcy and the tax liabilities of Dr Edelsten have been wholly discharged.

Your response within seven (7) days from the date hereof would be appreciated.''

Subsection 14T(1) of the Taxation Administration Act contains two separate and distinct sources of power requiring the Commissioner to revoke a departure prohibition order. Subsection 14T(2) confers an unfettered discretion upon the Commissioner. Subsection 14T(1) imposes a duty on the Commissioner, but that duty is imposed only if one or more of a number of conditions precedent are satisfied. The use of the word ``shall'' supports the imposition of a duty. This is to be contrasted with the word ``may'' where used in subsection 14T(2).

Each subsection has effect only where a departure prohibition order is in force in respect of a person. This is consistent with the requirement of ss 14S(2) which provides that a departure prohibition order remains in force ``unless and until revoked under section 14T or set aside by a court''. The reference to a court is to the power of a court to set aside a departure prohibition order on appeal under s 14V, see in particular s 14X.

Subsection 14T(1)(a) has two conditions precedent to the performance of the duty of the Commissioner to revoke a departure prohibition order under paragraph 14T(1). The first condition precedent is that ``the tax liabilities to which the person is subject have been wholly discharged''. This condition precedent, as expressed, contains some difficulties. The use of the words ``tax liabilities'' instead of the words ``tax liability'' is noted. Normally it would be expected that by reason of s 23 of the Acts Interpretation Act 1901 the words ``tax liability'' would have included ``tax liabilities'' and the words ``tax liabilities'' would have included ``tax liability''. It is intriguing to note the word ``is'' instead of the word ``was''. During the hearing, it was suggested that ``is''

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should be read as ``was''. These matters will be considered later.

The second condition precedent to the performance of the duty of the Commissioner to revoke the departure prohibition order under subsection 14T(1), is that even though the tax liabilities to which the person is subject have been wholly discharged, he must also be satisfied of one of two alternatives namely:

(a) that it is likely that the tax liabilities to which the person may become subject in respect of, or arising out of, matters that have occurred will be wholly discharged; or

(b) that it is likely that the tax liabilities to which the person may become subject in respect of, or arising out of, matters that have occurred will be completely irrecoverable.

The requirements of paragraph 14T(1)(b) are completely different to the requirements of paragraph 14T(1)(a) and constitute a true alternative to the requirements of paragraph 14T(1)(a). Even so, it is interesting to note that under paragraph 14T(1)(b) the Commissioner must be satisfied ``that the tax liabilities to which the person is subject'' are completely irrecoverable. The words quoted are the same as the opening words of paragraph (a), but under (b), the Commissioner need not concern himself with whether the ``tax liabilities'' have been wholly discharged nor need he be satisfied ``that it is likely that the tax liabilities to which the person may become subject in respect of, or arising out of, matters that have occurred will be completely irrecoverable'' before being obliged to revoke the departure prohibition order under paragraph 14T(1)(b).

In the letter to the Commissioner of 5 August 1991, the solicitors for the applicant do not state the particular provisions of s 14T relied upon to support the application. It is clear that the application was not based on subsection 14T(2). By the reference to the tax liabilities being wholly discharged, the letter suggests that the applicant is relying on paragraph 14T(1)(a) and in particular sub-para (i) and is not relying on paragraph 14T(1)(b). It is not clear what powers the Commissioner exercised, but at the hearing of these matters, the parties seemed to rely upon paragraph 14T(1)(a)(i).

The decision not to revoke the departure prohibition order was dated 13 September 1991 and was served on the applicant. The decision was expressed as follows:

``NOTICE OF REFUSAL TO REVOKE A DEPARTURE PROHIBITION ORDER

Pursuant to sub-section 14T(5) of the Taxation Administration Act 1953, I, JOHN ALEXANDER SEBERRY, delegate of the Commissioner of Taxation, hereby refuse to revoke the Departure Prohibition Order bearing the date of Sixteenth day of December 1986 prohibiting the departure of GEOFFREY WALTER EDELSTEN from Australia for a foreign country.''

Reasons for the decision were given at a later date. They comprise a number of paragraphs. Paragraphs numbered 1 to 22 are under the heading ``The findings on material questions of fact were:''. Among other things, reference is made to legal proceedings between the trustee in bankruptcy of the applicant and the applicant.

Under the heading ``The reasons for the decision not to revoke the Departure Prohibition Order pursuant to Section 14T of the Taxation Administration Act'' the following paragraphs are set out:

``23 There are liabilities outstanding in excess of $1 million for personal income tax owing by the taxpayer which have been held by the Federal Court of Australia to have not been discharged by reason of him being made bankrupt in March 1988.

24 Although the taxpayer has been discharged from bankruptcy, the trustee of his bankrupt estate has made an application to the Federal Court of Australia seeking to have the taxpayer declared an undischarged bankrupt.

25 Further or in the alternative, the trustee is seeking an order pursuant to section 33 of the Bankruptcy Act that the time that he (the Trustee) could file an objection to the taxpayer's discharge from bankruptcy be extended up to and including the date such an order was eventually made.

26 In view of paragraphs (24) and (25) little weight can be given to the taxpayer's request that the Departure Prohibition Order should be revoked as he has now been discharged from bankruptcy.

27 It is considered that the tax liabilities to which the taxpayer is subject are not wholly irrecoverable as the Trustee of his bankrupt

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estate has action in course in the Federal Court of Australia, alleging that the taxpayer's actions during the period he was an undischarged bankrupt amounted to a contempt of the court's orders.

28 No arrangements satisfactory to the Commissioner have been made for the taxpayer's tax liabilities to be wholly discharged.

29 Personal income tax assessments in respect of the taxpayer for the 1988, 1989 and 1990 financial years will issue in the near future. It is likely that the taxpayer will incur substantial liabilities as a result of these assessments being raised.

30 The Commissioner is not satisfied that the tax liabilities to which the taxpayer is likely to become liable will be wholly discharged or be completely irrecoverable.

31 The Commissioner is not satisfied that it is likely arrangements satisfactory to the Commissioner will be made to wholly discharge the tax liabilities to which the taxpayer could become liable as a result of the income tax assessments for the 1988, 1989 and 1990 financial years.

32 In view of paragraphs (23) to (31) above, it would be contrary to the intention of the legislation to revoke the Departure Prohibition Order using the Commissioner's discretionary powers.

33 The Commissioner is not satisfied that the Departure Prohibition Order should be revoked on humanitarian grounds.

34 The Commissioner is not satisfied that the refusal to revoke the Departure Prohibition Order would be detrimental to the interests of Australia.''

From a reading of these reasons, it is not clear that the Commissioner, by his delegate, understood the nature of and the differences between the duties and powers imposed and conferred upon him by s 14T of the Taxation Administration Act. Where such extreme, almost draconian, powers as those conferred by sections 14S and 14T are conferred upon an administrative officer to restrict the freedom of a person in Australia for an indefinite period, it is important that the administrative officer should not only understand, but refer to, the relevant statutory provisions when considering an application to revoke a departure prohibition order. Apart from an order of a court setting aside the order on the hearing of an appeal from the making of a departure prohibition order, the order remains in force until revoked by the Commissioner.

In the present case, the applicant did not state clearly which duty or power he was requesting the Commissioner to perform or exercise. In giving reasons for his decision, the Commissioner, by his delegate, compounded the confusion by not stating the source of the duty or power he was performing or exercising. Paragraph 23 refers to the tax liability which founded the making of the departure prohibition order and an unsuccessful application for revocation of that order based upon the sequestration order; see
Edelsten v FC of T89 ATC 4120; (1988) 85 ALR 226. The statement that the tax liabilities outstanding at the time the departure prohibition order was made remain outstanding, suggests a complete misunder- standing of the meaning of ``tax liability'' when used in Part IVA of the Taxation Administration Act and the effect of the Bankruptcy Act. Paragraphs 24, 25 and 26 disclose a misunderstanding of the law. As a result of the operation of law, the applicant was discharged from his bankruptcy with all the legal results flowing therefrom. The Commissioner was required to act upon that. Further, at the time the decision was made, 13 September 1991, the trustee had not instituted the proceedings referred to in paragraphs 24 and 25. The reasoning based upon paragraphs 24, 25 and 26 constitute error on the part of the Commissioner. The Commissioner should have acted upon the certificate of the discharge from bankruptcy. It is difficult to understand the relevance of paragraph 27. It is not clear whether it is directed to the duty imposed by sub-paragraph 14T(1)(a)(ii) in which case no reference is made to the ``satisfaction'' referred to earlier in that sub-paragraph, or to the duty imposed by paragraph 14T(1)(b) when the only condition precedent to the performance of the duty to revoke the departure prohibition order is that the Commissioner is satisfied that existing tax liabilities to which the person is subject are completely irrecoverable. In either event, it is difficult to see the relevance of contempt of court proceedings. Paragraph 28 is obscure. It is not clear whether it refers to tax liabilities in existence in 1986 when the departure prohibition order was made, to tax liabilities in existence when the sequestration order was

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made in 1988, to tax liabilities in existence when the applicant was discharged from bankruptcy in 1991 or to tax liabilities in existence when the decision was made by the Commissioner, by his delegate in 1991.

Paragraphs 29, 30 and 31 are directed to possible tax liabilities that may arise in the future. This gave rise to the main contentions advanced at the hearing of these applications.

It is difficult to understand the relevance of paragraphs 32, 33 and 34. They appear to be related to the discretionary power conferred by subsection 14T(2). The applicant did not request the exercise of that power. The Commissioner can exercise that power on his own motion. In the absence of explanation, it is difficult to understand why the Commissioner, by his delegate, should say, on his own motion, that despite the absence of a request from a person against whom he had made a departure prohibition order that the order be revoked under subsection 14T(2), he would not revoke the order using his discretionary powers. This might have been appropriate if the Commissioner had expressed the view that as a result of his refusal to perform a duty under subsection 14T(1), he had considered the matter further and had decided not to exercise powers which would have had the same effect. This was not said. Paragraphs 33 and 34 can have no application under subsection 14T(1). No further reference will be made to these three paragraphs.

It is necessary to consider now the proper construction of s 14T of the Taxation Administration Act, but any consideration depends upon a proper understanding of s 14S. The power to make a departure prohibition order depends upon a condition precedent, namely that the person involved is subject to a tax liability. By definition, this means that the power is subject to a liability to the Commonwealth arising under, or by virtue of, in this case, the Income Tax Assessment Act 1936. Section 17 of that Act provides that income tax is levied and shall be paid upon the taxable income by any person whether a resident or a non-resident. Part IV contains detailed provisions enabling the Commissioner to make an assessment of the amount of the taxable income of any taxpayer and of the tax payable thereon. For present purposes it is not necessary to make reference to default assessments, special assessments and amended assessments. Under s 174, the Commissioner is required to serve notice of any assessment made ``upon the person liable to pay the tax''.

Part VI of the Income Tax Assessment Act contains detailed provisions relating to the collection and recovery of tax. Under s 204, any income tax assessed is due and payable by ``the person liable to pay the tax'' on the date specified in the notice of assessment being not less than 30 days after service of the notice. Subsection 208(1) is important and is set out in full:

``208(1) Income tax when it becomes due and payable shall be a debt due to the Commonwealth, and payable to the Commissioner in the manner and at the place prescribed.''

Section 209 makes provision for one method by which the liability to pay tax can be enforced, namely by court action. Subsection 209(1) is set out in full:

``209(1) Any tax unpaid may be sued for and recovered in any Court of competent jurisdiction by the Commissioner or a Deputy Commissioner suing in his official name.''

Part VI contains other provisions by which income tax liable to be paid by a taxpayer may be recovered by the Commissioner. In all cases, however, the liability depends upon an assessment which has been made by the Commissioner which determines the amount of the liability.

The power conferred upon the Commissioner by subsection 14S(1) of the Taxation Administration Act in a case where the relevant taxation law is the Income Tax Assessment Act, depends, in my opinion, upon the existence of a liability to pay income tax by the person against whom a departure prohibition order is contemplated. The liability depends upon the existence and service of a notice of assessment where the amount assessed is due and payable but is unpaid. In other words, there is in existence a debt due to the Commonwealth and payable to the Commissioner. In that case, that person is a person who ``is subject to a tax liability''.

The discretion conferred by paragraph 14S(1)(b) of the Taxation Administration Act is very wide. The expressed purpose of the conferring of the discretion is to ensure ``that a person does not depart from Australia for a

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foreign country'' without ensuring that the tax liability is discharged or will be discharged. The unexpressed major premise seems to be the protection of the revenue and for that end wide powers are given to the Commissioner, acting in an administrative capacity, as both prosecutor and judge, to restrict the freedom of a person in Australia without notice to that person. There is a right of appeal to the Federal Court from the making of a departure prohibition order and the Court would need to determine that appeal on the facts proved to the Court by evidence. The appeal would be to the Federal Court exercising its original jurisdiction with all that flows therefrom. It must be remembered that when made, a departure prohibition order remains in force until it is set aside on appeal or revoked under s 14T. It must be remembered also that the power to make a departure prohibition order is not to be exercised against every person subject to a tax liability who is planning to depart from Australia. There must be many taxpayers subject to a tax liability who depart from Australia without being required to discharge that tax liability before so departing.

An analysis of the form of s 14T of the Taxation Administration Act has been given earlier in these reasons. In the present case, the appellant appears to have made an application based upon paragraph 14T(1)(a), but some reference will be made to paragraph 14T(1)(b).

In their submissions, senior counsel for the Commissioner, and counsel for the appellant, both contended that the word ``is'' in the phrase ``the tax liabilities to which the person is subject'' should be read as ``was'' and should be construed as referring to the tax liability (or liabilities) to which the person was subject at the time the departure prohibition order was made. In my opinion, that contention is based on a misunderstanding of the nature of a departure prohibition order. Such an order, when made, remains in existence and operative even though the tax liability upon which the order was based is paid in full. Even though the person is not subject to any tax liability, nevertheless the order still applies to make it an offence for that person to depart from Australia without a departure authorization certificate. It is in this context that paragraph 14T(1)(a) applies. The provision is ambulatory. If at the time the Commissioner is to determine whether he is under a duty to revoke the order, tax liabilities, no matter when they arose, must have been wholly discharged. The use of the words ``tax liabilities'' seems to suggest tax liabilities in addition to, but including, the tax liability on which the order was based. The use of the word ``is'' appears inelegant since, if all the tax liabilities have been wholly discharged, the person cannot be said to be subject to any tax liability. Therefore, if the person, against whom a departure prohibition order is in force at the time the Commissioner is requested to perform his duty under paragraph 14T(1)(a), has discharged the tax liability the subject of the departure prohibition order but has other tax liabilities which have arisen thereafter, it cannot be said that the tax liabilities to which the person is subject have been wholly discharged.

In my opinion, the first requirement contained in paragraph (a) of paragraph 14T(1)(a) is that the person seeking the revocation is not subject to any tax liability at the time the application for revocation is being considered. On the facts of this case, as discussed later in these reasons, the applicant was not subject to any tax liability, or liabilities, on 13 September 1991 when the Commissioner refused to revoke the departure prohibition order.

It is the second limb of paragraph (a) of paragraph 14T(1)(a) of the Taxation Administration Act which contains the real sting inherent, but not readily apparent, in the operation of a departure prohibition order. Before a departure prohibition order must be revoked under paragraph 14T(1)(a), not only must the person bound by the order not be subject to any tax liability but also the Commissioner must be satisfied ``that it is likely that the tax liabilities to which the person may become subject in respect of, or arising out of, matters that have occurred will be wholly discharged or completely irrecoverable''. This requirement looks to the future. It must be based on facts which have occurred at the time the duty is to be performed, but consideration can be given to the tax liabilities to which the person may become liable in the future but based on those facts. It may be thought that this is quite unfair but this is what the section provides. Apparently, the facts which justified the making of the departure prohibition order, even in the absence of any existing tax liability, are deemed sufficient to prevent the performance of the duty imposed by paragraph

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14T(1)(a). Essentially these factors must relate to the protection of the revenue. Facts must have occurred which give rise to a likelihood that the person will become, in the future, subject to a tax liability. If these facts exist, the Commissioner must be satisfied that tax liabilities so arising will be wholly discharged or be completely irrecoverable. In the present case, the Commissioner, by making reference to the matters set out in paragraphs 29 and 30 of the reasons for decision, seems to be relying on the second limb of paragraph (a) to prevent the imposition of the duty to revoke the departure prohibition order. This conclusion is strengthened by comparing the conditions precedent necessary for the operation of paragraphs 14T(1)(a) and 14T(1)(b).

The condition precedent imposed by paragraph 14T(1)(b) to the performance of the duty imposed on the Commissioner to revoke the departure prohibition order, is completely different from those imposed by paragraph 14T(1)(a). It posits the existence of tax liabilities at the time the duty is to be performed, whether they be the tax liability upon which the departure prohibition order was based or other tax liabilities which have arisen thereafter. The Commissioner, in these circumstances, must revoke the order if he is satisfied that the tax liabilities to which the person is subject at that time ``are completely irrecoverable''. Any question of future tax liability or liabilities is completely irrelevant. In this regard, paragraph 31 of the reasons for decision seem to have no relevance. On the facts of this case paragraph 14T(1)(b) can have no application since on 13 September 1991, when the decision was made, the applicant was not subject to any tax liability. This supports the view that the Commissioner appears to have relied on paragraph (a), as opposed to paragraph (b), of s 14T(1) in refusing to revoke the departure prohibition order.

In the present case, many detailed submissions were made on the question of whether the tax liabilities upon which the departure prohibition order was made against the appellant had been wholly discharged when the appellant was discharged from bankruptcy upon the expiration of three years from the date of the bankruptcy on 10 March 1988; see s 149(1) of the Bankruptcy Act. The tax liability to which the appellant was liable at the time of his bankruptcy has been referred to earlier in these reasons. His liability was a debt due to the Commonwealth and payable to the Commissioner. Under s 58 of the Bankruptcy Act, upon him becoming a bankrupt, all his property forthwith vested in his trustee in bankruptcy. Further, after acquired property vested in the trustee as it was acquired by or devolved on the applicant (see subsection 58(b) and s 116). Under s 82 of the Bankruptcy Act, all debts and liabilities of the applicant, including the tax liabilities to which the applicant was subject, became provable in his bankruptcy. The Commissioner could no longer sue the applicant for the recovery of the then existing tax liabilities. The Commissioner had to prove his debt in the bankruptcy.

The Bankruptcy Act imposes duties and obligations upon a bankrupt and confers powers upon trustees in bankruptcy and upon creditors. These are designed to assist in the getting in of the property of the bankrupt, the payment of creditors and the payment of any surplus to the bankrupt. Section 152 ensures that the duties and obligations imposed upon a bankrupt continue to apply to a discharged bankrupt; see also
Official Receiver in Bankruptcy v Todd & Ors (1986) 70 ALR 119.

Subsection 153(1) of the Bankruptcy Act provides:

``153(1) Subject to this section, where a bankrupt is discharged from a bankruptcy, the discharge operates to release him from all debts (including secured debts) provable in the bankruptcy, whether or not, in the case of a secured debt, the secured creditor has surrendered his security for the benefit of creditors generally.''

No other part of s 153 is relevant for present purposes.

The effect of this section is that the applicant's discharge from bankruptcy from 11 March 1991 released him from the debt he owed to the Commonwealth being the tax liability to which he was subject at the time the sequestration order was made on 10 March 1988. The debt was provable in the bankruptcy. Generally see
Clyne v DFC of T & Ors(1984) 154 CLR 589 at 593-595.

Accordingly, in my opinion, although the applicant was subject to a tax liability on 10 March 1988, that tax liability was discharged, as against the applicant, on 11 March 1991. In the absence of some new tax liability arising

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after 10 March 1988, it cannot be said that the applicant was subject to any tax liability on 13 September 1991. In other words, on the material before the Commissioner when his delegate made the decision under s 14T of the Taxation Administration Act, the tax liability to which the applicant was subject had been wholly discharged. It is not to the point that the Commonwealth has not received 100 cents in the dollar from the estate of the applicant. It is not to the point that the applicant has duties and obligations imposed upon him by the Bankruptcy Act. His tax liability had been wholly discharged by reason of his discharge from bankruptcy.

The effect of this conclusion is that the first of the two conditions precedent set out in paragraph (a) of paragraph 14T(1) is satisfied. As a result, paragraph 14T(b) can have no application since at 13 September 1991 the applicant was not subject to any tax liabilities. It remains to consider whether the second condition precedent set out in paragraph (a) is satisfied.

Paragraphs 29 to 31 of the reasons for decision seem to be relevant for this purpose. Nowhere do the reasons assert that on 13 September 1991 the applicant was subject to tax liabilities other than the liabilities upon which the departure prohibition order was based. Implicit from the assertions in paragraph 29 is the fact that personal income tax assessments in respect of the applicant for the 1988, 1989 and 1990 financial years had not been issued or served on the applicant by 13 September 1991. This fact is confirmed by the Commissioner not producing any such assessments or copies thereof which were in existence on 13 September 1991 pursuant to a subpoena to produce documents. Nowhere in the reasons for decision, however, are there set out any findings of fact upon which it could be said that the Commissioner was satisfied ``that it is likely that the tax liabilities to which the (applicant) may become subject in respect of, or arising out of, matters that have occurred will be wholly discharged or completely irrecoverable''. Paragraph 29 contains an assertion but nowhere are the facts set out upon which the assertion is based. In these circumstances, the problems discussed in
Minister for Immigration Local Government and Ethnic Affairs v Taveli (1990) 94 ALR 177 need not be considered.

From the whole of the circumstances of these proceedings, including the confusion apparent in the reasons for decision given by the Commissioner, by his delegate, I am satisfied that the decision is affected by errors in law in the construction of s 14T of the Taxation Administration Act. The error of law resulting from the misunderstanding of the effect of the Bankruptcy Act may not, of itself, have resulted in the wrong decision being made, but that error, when added to the absence of any clear statement of the relevant provisions of the Taxation Administration Act relied upon and the confusion as to the nature of the duty of the Commissioner arising under s 14T, are sufficient to support the applicant's case under the Administrative Decisions (Judicial Review) Act. In particular, the applicant has made out the ground specified in paragraph 5(1)(f) of that Act. For similar reasons, the applicant has made out a case under s 39B of the Judiciary Act.

The Court has power under paragraph 10(2)(b) of the Judicial Review Act, if adequate provision is made for review by another tribunal, to refuse to grant an application under s 5. Section 14Y of the Taxation Administration Act makes provision for a review by the Administrative Review Tribunal of a decision of the Commissioner under s 14T. In the present case, the real issue raised by the application was the proper construction of s 14T of the Act. It is appropriate that this issue be heard and determined by the Court. Further, the application under s 39B of the Judiciary Act had to be heard and determined by the Court. Accordingly, the Court does not exercise the power conferred by s 10 of the Judicial Review Act against the applicant.

Submissions were made as to what order should be made. It is completely inappropriate for this Court in proceedings of this type to make an order revoking the departure prohibition order. Many facts need to be investigated. Accordingly, the orders proposed to be made in matter No VG 306 of 1991 are that the decision of 13 September 1991 be set aside and that the matter be referred to the Commissioner for further consideration according to law. Apart from costs, it is not proposed to make any mandatory order in matter VG 403 of 1991: that matter will be dismissed. During the course of the hearing, the question of the Commissioner's costs of complying with the subpoena issued by the

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applicant was raised. Those costs were and will be reserved. In each matter the Commissioner will pay the applicant's costs, with the question of the Commissioner's costs relating to the subpoena reserved.

The effect of these orders is that the departure prohibition order remains in force. In considering the application for revocation of that order, the Commissioner should have regard to the facts existing at the time of the further consideration.

THE COURT ORDERS THAT:

1. The decision of the Deputy Commissioner of Taxation, by his delegate J.A. Seberry, of 13 September 1991, be set aside and the matter be referred to the Commissioner for consideration and determination according to law.

2. The costs of the Respondent in complying with the subpoena issued by the Applicant be reserved.

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